HKSAR v. Lam Chun Yin
|
DCCC 1207/2025 [2026] HKDC 1739 IN THE DISTRICT COURT OF THE HONG KONG SPECIAL ADMINISTRATIVE REGION CRIMINAL CASE NO 1207 OF 2025 ------------------------------
------------------------------
--------------------------------------------- REASONS FOR SENTENCE --------------------------------------------- 1.In this case, the defendant is convicted onhis plea and admission of facts of one count of Conspiracy, contrary to section 9(1)(a), 12(1), 12A(1) of the Prevention of Bribery Ordinance, Cap 201 and section 159A and 159C of the Crimes Ordinance, Cap 200. 2.The prosecution contended that the defendant, as an agent of a bank, namely China Construction Bank (Asia) Corporation Limited (CCBA) conspired with one Wan Cheuk Lun, one Udi Ginati and the other persons to accept an advantage in the form of a quantity ofcryptocurrency“Tether”, as a reward for authenticating some standby letters of credit and collateral letters purportedly issued by the China Construction Bank Corporation and the China Construction Bank Corporation (Asia). The Background 3.The conspiracy took place amid a background involving insurance company’s business. It can be set out simply as this. After an insurance company (“the cedent”) underwrites an insurance policy, it can transfer part of risk in the form of reinsurance to another insurance company (“the reinsurer”). Such activities is called the reinsurance. Thus, the cedent can share its financial exposure under the policy, and the reinsurer can share a portion of the premium paid to the cedent. 4.The transfers of risk and sharing of premium are known as insurance-linked securities transactions (“ILS”). They are tradable securities available for capital investments. They could be conducted via digital platforms, enabling ILS transactions to be conducted between insurance companies and capital market investments. Thus the cedents could share the financial exposure by paying a portion of premiums to the investors who assumed the financial risk in case the liability of the insurance policies came into existence. 5.The investor is required to provide collaterals in the form of either cash deposits or standby letters of credit (“SBLC”) issued by a reputable bank as a security or as a form of financial backup to ensure funds were available to settle the insurance claims in the event the liability therefrom arises. These are instruments to protect the cedent bank. The Parties 6.In the present case, Vesttoo (“VL”) was an Israeli fintech company operating such a digital platform. Udi Ginati was a senior director of Capital Markets. The defendant was a relationship manager of consumer banking divisions of CCBA, a subsidiary of China Construction Bank Corporation (“CCB”). His duties included providing retail banking services to individual customers. As an employee/agent, he was allocated an official email account under his name. While he was working in the CCBA, he came to know Wan Cheuk Lun, the other co‑conspirators named in the charge. 7.In early 2022, one of the investors in ILS facilitated by VL was a Hong Kong-incorporated company called Yu Po Finance Limited (“YPFL”), subsequently renamed in mid-2022 as Yu Po Holdings Limited (“YPHL”). Its sole shareholder and director was one Mr Cheng Wai. 8.The defendant was introduced by VL as a contacting agent for CCBA for matters concerning SBLCs issued by CCB for the aforesaid YPFL/YPHL. The Fraud 9.Between the period of 19 April 2022 and 15 July 2023, the defendant in the capacity of agent of CCBA, replied to enquiries from VL’s staff, overseas insurance companies, their lawyers and auditors that the following documents were genuine:
10.During a meeting on 18 January 2023 and in May 2023, the defendant, acting on behalf CCBA, undertook to provide details of all SBLCs issued by CCB. He did so on the 8th day of May 2023 by forwarding a list sent to him by CheungWai stating that it was a list of SBLCs issued by CCB for YPHL. 11.By so doing the defendant had in effect confirmed that the SBLCs and collateral letters of credit were genuine and valid. It was subsequently revealed that they were not issued by the banks and were not in even the form used the bank by or by the people known to the bank. The Payment 12.On 23 June 2022 and 24 June 2022, the defendant received a total of 473,616 USDT (a cryptocurrency called “Tether” maintained a 1:1 value with US dollar), upon which the defendant converted the amount into HK$3.53 million. The Investigation of CCBA 13.In July 2023, during an investigation held by the head of fraud and risk management team of CCBA’s, the defendant admitted that he sent the replies to VL upon promise by Ginati and Cheung Wai of monetary reimbursement. In fact, the CCBA and CCB had not issued the said instruments. 14.In confirming the validity of these instruments, the defendant had caused potential economic loss and damaged and caused damage to the reputation of his employer and its parent company. 15.The prosecution confirmed that the conspiracy only involved HK$3.5 million, but the damage to bank’s reputation cannot be quantified and the potential loss of the bank could go up to US$1.68 billion. 16.The defendant as an agent for the bank had been acting at least in breach of his position. The Sentence 17.Under section 12(1)(a)(i) of the Prevention of Bribery Ordinance, Cap 201, the sentence could be a fine of $500,000 and 7 years. 18.The Court of Appeal has been reluctant to lay down rigid guidelines as each set of facts could determine the culpability of the defendant, but has pointed out in the past that bribery if unchecked, whether in the form of accepting or offering; strikes at the heart of commercial and public life. Unless it is a technical breach, even first offenders should expect a deterrent sentence (see SJ v Kwan Chi Cheong [2009] 4 HKLRD 273). 19.In HKSAR v Pau Chin Hung Andy [2014] 1 HKLRD 600, the Court of Appeal observed that such a serious offence warrants an immediate custodial sentence. Personal background does not constitute exceptional circumstances and warrant exceptional leniency. Apart from the actual economic loss, the sentencing court ought to take a broader view of the matter and take into account of the worst effect this type of offence on the society. In the particular case, the amount involved was 1.1 million and the Court of Appeal approved a starting point of 4 years. 20.While sentencing is not a mathematical exercise, this could be a gauge upon which the undersigned could consider the starting point for the present case. What strikes me as the most serious factor is the fact that banking and insurance in Hong Kong constitute the bread and butter of the society. What the defendant did was sowing rot at the core of the Hong Kong’s existence. 21.The case also involved international elements. Not only it would affect the reputation of Hong Kong as a business centre; if similar offences were committed as a norm, anyone dealing with letters of credit issued by the banks in Hong Kong, including international customers and banks and investors, would at least have to look twice at the letters of credit and would not take any representation by the agent of the banks on its face value. That not only affects the reputation of Hong Kong, it also affects the efficiency of the running of the society, and causes extra administrative expenses for verification. 22.I also take into account of the possible financial loss of the bank. Although there is no evidence that any triggering event affecting the liability of the policies had taken place, there is still an offence involving a risk of a total of US$1.68 billion. 23.Having considered the matter as a whole, I concluded that this is an instance close to the maximum criminality in the offence. I adopt a 6 years’ starting point. It is reduced to 4 to reflect his plea of guilty. 24.I have taken into account of the background provided by the defence counsel in his written mitigations. As already stipulated by the Court of Appeal, in dealing with serious offences like the present one, the personal backgrounds of the individual defendants should not constitute exceptional circumstances. I am aware that the defendant had a clear record, but for offences of this kind, a clear record is almost a prerequisite for people to be entrusted with such important duties. Therefore the fact that the defendant had not committed any previous offence in the past is not a mitigating factor at all for, otherwise, he would not be able to commit the offence. 25.Having considered the matter as a whole, I would sentence the defendant for the present offence to 4 years’ imprisonment, to take effect immediately.
|
Summaries and metadata are generated from the judgment. Report an error
Cases cited in this judgment